Brasilia on Off: 2021 Budget War heats up again

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The war around the Budget 2021 warmed up again. The dispute now involves the bill PLN 4, in which the government recomposes almost R $ 20 billion in mandatory expenses that were cut by Congress to boost parliamentary amendments.

Ministries that counted on the amendments to make investments are now trying to use the project to recover their funds. The arguments are that the Economy was excessively conservative when estimating expenses with Social Security and welfare benefits for 2021, and that it would not be necessary to restore all the R $ 20 billion requested by Minister Paulo Guedes. There would be scope to free up at least R $ 3 billion for other portfolios, including Regional Development, which is at risk of paralyzing around 700 works and the construction of 250 thousand housing units due to lack of resources.

Some space in Social Security and assistance benefits could even come from the reduction in the number of beneficiaries due to the deaths caused by the pandemic. There would also be scope to reduce expenditure on closed insurance, a benefit paid to artisanal fishermen, where there is evidence of diversion of resources.

Tax reform

The economic team awaits an understanding between the Chamber and the Senate to resume tax reform along the lines defended by Guedes. The proposal that is being tied up with the mayor, Arthur Lira, would have five chapters, and the government should soon send to Congress one that deals with changes in the Income Tax. It includes dual VAT, the elimination of the IPI with the creation of a selective tax on products such as tobacco and alcoholic beverages, a restructuring of the Income Tax, with the end of exemptions on financial products and taxation of dividends, in addition to a renegotiation of tax debts. The problem is in the fifth chapter: the creation of a transaction tax. This matter is forbidden. For a while.